Corral Q1 2017 May 2017
Disclaimer This presentation has been prepared by Corral Petroleum Holdings AB (publ) and/or its subsidiaries and affiliates ( Corral ). The information contained in this presentation is for information purposes only. Among other things, this presentation is intended to be used in connection with a scheduled international conference call for investors and analysts to be held on June 1, 2017 at 3:00 pm CET. The call-in number is +46 8 5052 0110 and the meeting code is Preem. The conference call will also be available for replay for a limited time beginning on June 2, 2017 with access information to be posted via the "Press and Notices" heading of the Corral investors section of Preem's website at https://www.preem.se/en/in-english/investors/corral/results-and-reporting/. The information contained in this presentation is not intended to be used as the basis for making an investment decision. 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Certain financial data included in the presentation are non-ifrs financial measures. These non-ifrs financial measures may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with International Financial Reporting Standards ( IFRS ). Although Corral believes these non-ifrs financial measures provide useful information to users in measuring the financial performance and condition of its business, users are cautioned not to place undue reliance on any non-ifrs financial measures and ratios included in this presentation. This presentation contains forward-looking statements. Examples of these forward-looking statements include, but are not limited to statements of plans, objectives or goals and statements of assumptions underlying those statements. 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First Quarter Market and Market Outlook
Source: Pira 4
OPEC key objectives: o reduce crude inventory surplus. o o move the market to backwardation. reach 60+ USD/bbl Brent. OPEC to continue cuts since Inventory Objective not achieved Source: Pira Avg export -0.85 MBD only -- and from an extremely high level +0.1 MBD per month since October 2016 Source: Pira Source: DNB 5
6
US + Europe Combined Diesel/Gasoil Stocks Russian Fuel Oil Exports F cast Source: Pira 7
Product Crack Spreads $/bbl 35 Gasoline cracks $/bbl 30 Diesel cracks $/bbl Fuel oil cracks Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 30 25-5 25 20 15 10 5 20 15 10 5-10 -15-20 -25-30 -35 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 yr Range (2012-2016) 2016 2017 5 yr Average (2012-2016) 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 yr Range (2012-2016) 2016 2017 5 yr Average (2012-2016) -40 5 yr Range (2012-2016) 2016 2017 5 yr Average (2012-2016) Source: Platts 8
First quarter Highlights Market and Operation European refining margins were stable at a healthy level during the first quarter of 2017. The support for the margins came mainly from the strong demand globally for gasoline reducing the gasoline inventory levels and from unusual strength in fuel oil. Financial Adjusted EBITDA for the first quarter 2017 was 1.429 MSEK, compared to 1.022 MSEK in the first quarter 2016 and operating profit was 1.182 MSEK compared to 775 MSEK in the first quarter 2016. On March 31, 2017 Preem satisfied the cash flow test and on May 29, 2017 Preem satisfied the minimum liquidity test under the Credit Facilities to upstream cash to Corral Petroleum Holdings for the July 1, 2017 scheduled interest payment on the 2021 Notes. 9
Projects and Activities Preem has agreed with YX Norge to acquire its bulk sales business in Norway. The transaction consists mainly of sales agreements with 15 resellers and approximately 600 direct customers, with the acquired business currently generating approximately 200,000 m3 of annual fuel sales. Investment in a Vacuum Distillation Unit in Lysekil with a total capital expenditure plan of 1.600 MSEK during the period 2016 to 2018. The project is progressing according to plan. All major mechanical items and works have been contracted. Site preparation work has been completed Investment in a Hydrogen Production Unit in Gothenburg with a total capital expenditure plan of 635 MSEK which is expected to be mechanically complete by the end of 2018. Strategic upgrade of IT systems with a total capital expenditure budget of 500 MSEK, mainly in 2016 and 2017, with planned implementation in 2017. Implementation is now expected stepwise in 2017 and 2018. The Gothenburg refinery is back in operation after the scheduled shutdown. All units except the Fluid catalytic cracking unit ( FCC ) in the Lysekil refinery are now back in operation. All mechanical work on the FCC is completed and startup is ongoing. 10
First Quarter Financial Summary
Refining Margin and Production 2006-2017 Q1 Refining margin Production LTM Q1 17 4.92 5yr 4.81 10yr 4.61 LTM Q1 17 113 401 5yr 110 699 10yr 109 388 *Rolling 12 months 12
Group First Quarter 2017 Results Revenue (MSEK) Revenue Change Q1 55% LTM 2.2% Comments Revenue The increase is a result of higher crude and product prices as well as higher sales volumes. Adjusted EBITDA * Adjusted EBITDA Improved Adjusted EBITDA is driven by higher margins and increased production volumes. Q1 36% LTM -26% Adj EBITDA Margin (% of Revenue) 7.4% 8.2% 6.5% 5.9% *As defined in the Corral Petroleum Holdings AB (publ) report for the first quarter ended 31 March 2017 13
Supply & Refining Segment Throughput (000 bbls) Comments 5% -4% Average Brent Crude Price ($/bbl) 59% -16% Throughput The refineries in Lysekil and Gothenburg had good operational performance and high utilization in the first quarter of 2017 with a throughput of 4.9 (4.7) million m3. Average Brent Crude Price During the first quarter of 2017, the price of Dated Brent traded in a range between 49 $/bbl to 56 $/bbl. The price fell to 49 $/bbl in the middle of March but climbed back up to 52 $/bbl by the end of the quarter. Refining Margin European refining margins were stable at a healthy level during the first quarter of 2017. The support for the margins came mainly from the strong demand globally for gasoline reducing gasoline the inventory levels and unusual strength in fuel oil. Average Refining Margin($/bbl) 4,27 37% 43% -30% 6,10 6,41-29% 4,50 Q4 15 Q4 16 FYE 15 FY16 14
Marketing Segment Revenue (MSEK) 38% -5% Comments Revenue Sales volumes were 4% higher in the first quarter of 2017 compared to the first quarter of the previous year. Marketing EBITDA (MSEK) Marketing EBITDA The decrease in operating profit is mainly attributable to higher selling expenses compared to the first quarter in the previous year. 34% -4% EBITDA Margin (% of Revenue) 5.0% 3.5% 3.3% 4.7% 15
Capital Expenditures Capex by Purpose (MSEK) (a) 1348 968 371 287 203 394 186 231 125 774 105 495 59 49 123 164 Q1 16 Q1 17 2015 2016 Recurring maintenance Incremental improvements Specific projects Comments Specific Projects The VDU investment in Lysekil, 74 MSEK Q1 2017. Strategic IT project. 51 MSEK Q1 2017. Specific projects in Q1 2016 includes a 5 MSEK in a Green Hydro Treater. Recurring maintenance Increased capex in Q1 2017 vs Q1 2016 driven by scheduled maintenance (12MSEK) and planned maintenance (16 MSEK). Regulatory/Environmental maintenance increased by 9 MSEK Safety/Risk maintenance increased by 4 MSEK Future investments In November 2016 the Preem Board approved a 635 MSEK investment in a Hydrogen Production Unit at the Gothenburg refinery. This attractive investment, which we expect will be mechanically complete by the end of 2018, is designed to further increase the refinery s desulphurization capacity. The investment has an estimated pay-back time of less than two years. Approximately 150 MSEK planned capital expenditure will be reallocated to 2017. Total capex in 2016 was 1.348 MSEK compared to plan 1,500 MSEK. Total capex in 2017 is estimated at 2,550 MSEK. (a) Shown on a gross basis. 16
Cash Flow (MSEK) Q1 16 Q1 17 LTM Q1 16 LTM Q1 17 Profit before taxes 515 934 764 128 Adjustments for items not included in cash flow -69 565 2 209 4 708 Tax paid 0-2 -1-1 Decrease(+)/Increase(-) in inventories 833-66 2 534-3 078 Decrease(+)/Increase(-) in operating receivables 265 320 403-372 Decrease(-)/Increase(+) in operating liabilities 1 057-523 -1 501 1 479 Changes in working capital 2 155-269 1 436-1 971 Cash flow from operating activities 2 650 1 227 4 409 2 864 Cash flow used in investing activities -231-403 -974-1 528 2 419 824 3 435 1 336 Amortization/Raising of loans -2 718-1 017-3 552 43 Loan expenditure 0 0 0-679 Cash flow used in financing activities -2 718-1 017-3 552-636 Cash flow for the period -299-193 -117 701 Comments Adjustments not included in cash flow are primarily deprecation, unrealized FX effects, write downs of inventory (or reversals) and reservations for Preem s receivable on Corral Morocco Oil&Gas. Cash flow was negatively impacted by movements in working capital of 270 MSEK for the first quarter of 2017 compared to a positive impact of 2,204 MSEK for the first quarter of 2016. Cash flow used in inventories amounted to 66 MSEK for the first quarter of 2017, primarily due to the increase in the price of crude oil. Cash flow from operating receivables amounted to 320 MSEK for the first quarter of 2017, primarily due to an increase in sales. Cash flow used in operating liabilities for the first quarter of 2017 amounted to 523 primarily due to the increase in the price of crude oil. The loan expenditure of 679 MSEK relates to the refinancing of both Preem AB and Corral Petroleum Holdings. Cash flow used in financing activities is the reduced utilization of Preem s revolving credit facility 17
Simplified Capital Structure Cap Structure at the end of Q1 2017 MSEK $M USD xebitda Cash (382) (43) RCF 4 209 471 Other interest bearing liabilities and transaction expenses (348) (39) Comments Continued deleveraging through reduced utilization of Preem s RCF Continued strong focus on paying cash coupons on the 2021 Notes Net debt Preem 3 479 390 1.07x 2021 Corral Notes 5 941 665 Transaction expenses (250) (28) Cash (452) (51) Total Corral Group 3rd part debt (a) 8 718 976 2.52x Adj EBITDA 1 184 133 USD:SEK Exchange rate 8.93 *Cash and debt figures exclude deeply subordinated debt held by our ultimate shareholder. **Exchange rate (SEK/USD) as of March 31, 2017 18
Liquidity Reserves Higher availability due to higher average prices and higher average inventory levels. Note: Drawdown and availability figures are not IFRS measures and are based on month end values averaged over the course of the year. In part, these values are internal calculations based on variables that are subjectively determined and which may not be comparable in approach to similar calculations of other companies 19
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